WAFarmers persists with crop insurance

WAFarmers will persist with offering multi-peril crop insurance for all Western Australian farmers in spite of the difficulties in getting a commercially viable scheme up and going. Grains section president of WAFarmers, Kim Simpson, said the difficulty was attracting enough members from all climatic zones to make an insurance product viable. “Obviously, the guys in the more marginal areas would be keen to cover themselves against the cost of production every year, but there aren’t enough of them to make the scheme work, so you’d need to be getting farmers from more reliable zones involved. “To do that, the product needs to be cheaper, as they would have less of a need for it, so it’s a very tricky situation.” Mr Simpson said he believed farmers in the dry areas of the eastern wheatbelt would probably see a $20 a hectare premium as reasonable, given the frequency of frost and drought, but this figure would be too high in less risky areas. “For instance, I am not in the most reliable area in the state, but even here at Wongan Hills (in the northern wheatbelt), I figured out I would have only had a claim twice in the past 40 years.” However, he welcomed the willingness of global reinsurer Swiss Re to participate in the WA grains market, and said he hoped a workable product could be developed. “There is a definite need for grain producers to have access to affordable crop risk mitigation insurance products and we applaud Swiss Re for making that a reality in WA,” Mr Simpson said. WAFarmers initially began formally investigating crop insurance in 2010 and worked in with CBH to look at developing a co-operative style insurance product, before CBH approached Swiss Re to participate in the project. A pilot scheme operated in WA in 2011 and there will be a product available this year, although it will have altered from the original co-operative model. “By participating in this scheme, Swiss Re became familiar with the potential opportunities in agriculture in Western Australia and I have no doubt that the crop risk mitigation insurance would not have occurred without this happening.” Mr Simpson said he welcomed the assistance of State and Federal governments, but said more help would help improve the product. “The Department of Agriculture and Food WA (DAFWA) was very supportive in getting the Cost of Production Cover off the ground initially, in terms of providing data and expertise, and we would hope that they would continue to play a role if required,” he said. He said the success of other crop insurance schemes, such as the famous US ‘Rolls Royce’ model depended on government subsidies to operate. “At this stage, without government support, our product will obviously be more stripped back.” “The main aim is just to avoid the big wipe-out and avoid a bad year sending growers bankrupt.” He said one potential problem in WA was the relatively high cost of production. “We probably have higher fertiliser costs than on the east coast, and herbicide costs also add up.”